Statements made in open offer do not constitute admissions, High Court rules

A party cannot use part of an open offer made during litigation as an admission by their opponent, the High Court has ruled.

Mr Justice Coulson said that to allow this would be contrary to the policy of courts encouraging parties to make offers.

He was ruling in The Dorchester Group Ltd (t/a the Dorchester Collection) v Kier Construction Ltd[2015] EWHC 3051 (TCC), in which Dorchester seeks various declarations, accounts and determinations as to the amount of undeclared discounts which Kier obtained from a sub-contractor.

Kier made an offer last month which was not accepted and has now been withdrawn. Dorchester then argued that it was entitled to judgment on the basis of ‘admissions’ made by Kier in the offer letter.

Coulson J rejected this submission. He said: “First, the letter of 21 September 2015 was an open offer. It contained a package of terms which Dorchester could either accept or reject. It would be contrary to the whole basis of an offer if Dorchester were permitted to accept what they say was a part of it (by claiming that it was an admission), whilst rejecting other elements of the same package.

“Courts must always encourage parties to make offers, in whatever form is appropriate. That is in accordance with the overriding objective. It would be contrary to that policy if the recipient of an offer like this could pick over its terms, accept parts and reject others, and thereby ensure that the litigation continues. That is not the purpose of an offer of this sort.”

He continued that in any case the ‘admissions’ did not meet the requirements of CPR 14.1, ‘Admissions made after commencement of proceedings’.

The judge was also asked to rule on the claimant’s application for specific disclosure. He said this was one of those “rare” cases where one party (Kier) held almost all of the relevant documents.

He had set a budget of £120,000 for the disclosure exercise (Kier had asked for £146,000) but at the time of the hearing Kier had spent around £500,000.

Coulson J said: “My figure reflected the fact that disclosure was to be on the standard basis, and that the relevant documents related to one sub-contract between Kier and Mitie, relating to one London building project. In my view, disclosure should not be difficult or time-consuming in a case like this… This disclosure process has been cumbersome, and inadequate.”

However, while he still considered £120,000 to be a reasonable and proportionate figure, the judge said the massive overspend did not mean, of itself, that no further order should be made on the grounds of proportionality.

“I have formed the view that the disproportionate costs of the Kier disclosure exercise are due to the way in which the exercise itself has been carried out.”

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